Stock X has a 10 percent expected return, a beta coefficient of 0.9, and a 25 percent standard deviation of expected returns. Stock Y has 12.5 percent expected return, a beta coefficient of 1.2, and a 25 percent standard deviation. The risk free rate is 6 percent, and the market risk premium is 5 percent.

a)Calculate each stock coefficient of variation?

b)Which stock is riskier for diversified investor?

c)Calculate each stock required rate of return?

d)On the basis of the two stock expected and required return, which stock would be more attractive to a diversified investor?

e)Calculate the required return of the portfolio that ha Rs. 7,500 invested in stock X and Rs. 2,500 invested in stock Y?

f)If the market risk premium increase to 6 %, which of the two stocks would have the larger increase in its required return?